House bill would create site-neutral payments for post-acute care, could save Medicare $100 billion over a decade, lawmakers say

Federal lawmakers have drafted a bill to implement bundled, site-neutral payments for post-acute services, which they say would save the Medicare program up to $100 billion over a decade.

Medicare would pay a lump sum to cover 90 days of care after hospital discharge under the “Bundling and Coordinating Post-Acute Care (BACPAC) Act of 2014.” Post-acute providers, physicians and hospitals would share up to 70% of any money left over after they deliver needed, high-quality care. A coordinator — which could be an insurance company, hospital, post-acute provider or third-party manager — would help guide the episode of care. The bundled payment system also would waive the three-day hospital stay currently needed to become eligible for Medicare coverage of post-acute care.

“We are not cutting funding for Medicare; we are encouraging efficiency in services and programs and making them more patient-centered,” said bill cosponsor Rep. David B. McKinley (R-WV). “By improving efficiency, we will not only save up to $100 billion but improve patient care and strengthen the Medicare program.”

The $100 billion figure came from an analysis by Dobson DaVanzo and Associates, according to McKinley's office.

The Health Subcommittee of the House Energy & Commerce Committee considered the bill during a hearing Wednesday, and members generally expressed support.

Currently, the Medicare reimbursement rate for a particular post-acute service might vary across different provider types. Because the bundled payment system would eliminate this variation, it is the type of “site-neutral” system that the Medicare Payment Advisory Commission has been regularly recommending. MedPAC Executive Director Mark E. Miller repeated that recommendation again when appearing before the Congressional panel Wednesday.

Hospitals and inpatient rehabilitation facilities — which generally are reimbursed at higher rates than other post-acute providers — have opposed site-neutral payments.